Nigeria’s inflation rate jumped 0.72% in December to push annual inflation to 28.92%, the highest in three decades.
According to the latest report from the National Bureau of Statistics (NBS), the Consumer Price Index, which measures the inflation rate rose from 28.2% in November amid persistent increases in prices.
On a yearly basis, the headline inflation rate was 7.58% points higher compared to the 21.34% year-on-year recorded in December 2022.
On a month-on-month basis, the headline inflation rate in December 2023 inched higher by 0.20% to 2.29%, indicating that in December 2023, the rate of increase in the average price level is more than the rate of increase in the average price level in November 2023.
The alarming inflationary trend has been attributed to the cessation of fuel subsidies, resulting in heightened transport costs, coupled with the depreciation of the naira.
The weakening of the national currency and the removal of the fuel subsidy weeks earlier led to a nearly tripled increase in transportation expenses.
Nigeria, Africa’s largest economy, has grappled with inflation exceeding the central bank’s target range since 2015.
The recent surge could prompt policymakers to consider substantial interest rate hikes in the first half of the year to curb escalating price pressures.
Governor Olayemi Cardoso, who assumed office in September, affirmed the central bank’s commitment to achieving monetary and price stability.
Market analysts expect the central bank to raise rates by 500 basis points in the first half of 2024 with inflation projected to peak at 29% in the first quarter.
As Nigeria confronts this economic challenge, policymakers face the delicate task of restoring price stability while navigating the complexities of a weakened currency and elevated inflationary pressures.
The nation’s economic trajectory will be closely monitored as the central bank contemplates measures to address the current inflationary spiral.
Since May 2022, Nigeria has raised rates by 725 basis points.